Coke debating an investment in Spotify

Coca-Cola is in discussions with music subscription service Spotify, weighing the benefits of a $10-million investment, according to those close to the discussions. An agreement isn’t assured, said one of the people, who sought anonymity because the talks are private. But an agreement may be reached in the next few weeks, Sky News reported yesterday, […]

Advertising Age
October 15, 2012

Coca-Cola is in discussions with music subscription service Spotify, weighing the benefits of a $10-million investment, according to those close to the discussions.

An agreement isn’t assured, said one of the people, who sought anonymity because the talks are private. But an agreement may be reached in the next few weeks, Sky News reported yesterday, citing people close to the beverage company.

The two companies announced a promotional partnership on April 18, as Spotify CEO Daniel Ek spoke at the Ad Age Digital Marketing Conference in New York. As part of that deal, Spotify will be the centerpiece of Coca-Cola’s “Year of Music” campaign in 2013 and Coke will promote the streaming service in paid media and through its massive distribution network.

According to Coke at the time, those promotions could include access codes on packaging, TV or billboard advertising or in McDonald’s restaurants. Said Ek at the time: “We want music to be like water, everywhere. But when you think about it, we want music to be like Coke, which really is everywhere.”

Coca-Cola, owner of the world’s most-valuable brand, has increased its ties to entertainment so it can market products to young consumers in a subtle way. The Atlanta-based company’s April deal followed a successful collaboration with record labels to produce the 2010 World Cup anthem “Wavin’ Flag.” The song by singer-songwriter K’naan was a No. 1 iTunes download in at least 17 countries.

Closely held Spotify is seeking to raise $100 million to $200 million from investors in a funding round that would value the company as high as $4 billion, people with knowledge of the situation said in May. The company was recruiting investors including Goldman Sachs, the people said then.

The service, based in London, has been expanding to new territories and seeking to add artists as it faces competition from rivals including Rdio. It raised $100 million last year from investors including DST Global, Accel Partners and Kleiner Perkins Caufield & Byers.